China Continues To Dominate Liquid Domain Market in Q1: GGRG

Chinese domain registrants are big investors in the domain name market, particularly in the 5 number (N) market, according to the latest Liquid Domains Market Overview from GGRG Brokerage Consulting for the first quarter of 2018. Chinese market share in the liquid domains market is approaching one-third (32.12%) of the total market, up 4,000 in the first quarter of 2018, and 10,000 in the quarter before that, to almost 200,000 domain names.

The US also gained one percent market share in the first quarter of 2018 among “liquid domains”, the shorter .com domain names that are actively and easily traded on the major marketplaces. The US ranked second behind China with a total of 18.54% while Europe and the rest of the world continued to hold a stable market share of around 7.5%. Domain names registered using a privacy service grew slightly to 21.67%.

The report notes there seems to be:
1) a positive correlation between the average domain value and domain privacy, and
2) an inverse correlation between domain privacy and the development index.

In other words, the more valuable a domain is, the more likely it is that it will be under privacy if it is not developed. This translates to record privacy numbers for Tier 1 categories like 2Ns and 3Ns, with nearly 50% of domain names under privacy registration.

The overall development index went down by 0.5%, with 4Ns domains making the biggest negative jump from 15.5% to 11.3%. 2Ls remained the most developed category at 35.95%, followed by the 3 letters (L) (28.46%) and the 2 characters (C) (28.08%). With the exception of 2Ns at 18%, all the other categories register development indexes between 10% to 15%, with 4Ls being the most developed (14.4%) and the 5Ns being the least developed (10%). 3Ns, 4Ns and 3Cs rank somewhere in the middle, respectively at 12.2%, 11.3% and 12.9%.

On sales, 2Ls .com domains registered a record $6M in escrow.com transactions, by far the best result since the publication of the first GGRG report. 4Ls kept a consistent $4.8M in turnover, followed by another strong quarter for the 3Ls at $3.5M. 3Ns and 4Ns also posted good quarters, respectively with $2.8M and $1.3M in escrow.com sales. While escrow.com did not record any 2Ns transactions, the other categories (5Ns, 2Cs and 3Cs) posted an aggregate of almost $1M, respectively at $225k, $143k and $562k. The total amount of sales reported by ShortNames.com was $7.7M, with 4,108 transactions and 0.67% turnover.

The negative trends came from 5th percentile values which kept registering double digits losses: 3Ls -21.46%; 5Ns -16.93% and 3Cs -11.11%. 4Ls lost only -3.13%. The positive note came from the median values (not present in our report) which showed significant increases for the 3Ls, 4Ls and 4Ns. This disparity in performance could be interpreted in two ways: 1) the domains sold in Q1 might have been of superior quality compared to last quarter, or 2) the value ranges of liquid domains are starting to polarize again. Lower liquidity in the second tier categories might also play a factor.

Looking ahead, the report says the key question for investors is when to buy batches of domain names at floor prices, as opposed to cherry picking ones with the highest end user potential, or selling their existing inventory altogether. The mix of positive signals (high sales volume for valuable categories) and negative signals (constant descent of 5th percentile values for the least valuable categories), can only mean that investors should continue looking at fewer but higher quality domains.

To download the latest Liquid Domains Market Overview (LXDO), go to: ggrg.com